My firm does this and they aren't broke. The secret is starting out small and growing from there. Many firms did follow the business model I proposed but they started in 1996-1998. They invested millions in fancy office space and equipment and threw lavish parties. Subsequently, they went belly up during the bear market because of the sheer weight of their monthly expenses. This is definitely a doable business model and not as far fetched as you might imagine. There are a handful of like minded trading groups out there.
We have let $$millions go with deficit traders, as you point out. O n the other side, by working with our traders who had real problems, many were able to come out of it and become very successful. This is a 2 way street, and both sides have to work together. I'm not sure why all the fuss about the "customer" issue, we went through all that a couple of years back....and we have an excellent Compliance Officer who keeps everything above board. Our traders are limited on the downside by the amount of capital they put up (like buying calls), and yet have an unlimited upside potential...why all the fuss?? We only do well if the traders do well...new traders don't do enough volume to make it worthwhile, so we encourage success, train for success, and hope all of our traders achieve success....and when the traders do well, then they trade more, then the firm makes some money. Don
why would the fed have any jurisdiction over professional trading firms in the first place. isn't the fed a group of ten PRIVATE banks....with a large percentage being foreign owned, or maybe close to 50%? are you saying they could tamper with broker call rates??? but that is retail isn't it??? i can see the SEC getting involved but they have already looked into this area.
The question is whether a trader who gets 100% of his P&L is a customer or a prop trader. Some exchanges, not the NYSE, have taken the stance that if you "invest" in an LLC, then your money is at risk to the whole firm and you are a prop trader. The NYSE, says you can't even make a contribution to a prop firm. Schoenfeld doesn't take capital contributions because he CAN'T. The fed has jurisdiction over customer margins. If they deem a trader who takes 100% P&L a customer, then the FED will determine margin. The tradr may not be able to be part of a JBO exemption. This is an unlikely outcome, but a possibility none the less.
"I do not think a company can be around since 1992, have over 400 traders and 40+ offices .... " A companies number of years in business and growth rate is not necessarily a good measure of how you will be treated. A company can be have high growth rates and be a sweatshop and treat its people poorly. Talking directly to ex employees or partners is usually the best way to get information before you decide to join a company or LLC. If presented with an employment or partnership agreement by any firm you should get it reviewed by an attorney.
Believe it or not, I totally agree ...everyone should check out any firm they plan on associating with. I doubt in this "free choice" economy that any "sweat shops" will be found in the trading industry, however.. Don
What were your experiences?, in detail, namely, which firm, when did you go there (during bull market, bear market or this malaise market?). What are your expectations?, are they reasonable, and do you know of any company/office that's providing that level of fullfilment? What are your expectations from yourself? Are they as tough/easy as those of the firm you're considering? When you GET REAL, you realize there's a huge difference from fantasy (which the advertising media encourages in all of us) and reality (which is always deflated from what's advertised). Let's face it, if you met Anna Nicole Smith or Sara Parker or Harrison Ford in person, you would easily prefer the silver screen representation to the real thing. (have fun with that one...
I sure wouldn't turn down Anna Nicole. She's larger than life and I prefer more cushion for the pushin'!